BlueBeat.com made waves this week in the music world by selling remastered …

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Original story

When the news broke earlier this week that the so-famous-you've-never-heard-of-it BlueBeat.com was both streaming and selling The Beatles remasters—and for 25� a track—we speculated that an entertainingly weird legal theory was at the root of this behavior.

We just had no idea how weird it was.

Meet "psycho-acoustic simulation"

The Beatles music is famously not available through the series of tubes we call the Internet, so there was more than a little skepticism that BlueBeat and its backing company, Media Rights Technologies, had somehow outdone Amazon and iTunes in getting the first online rights to the Beatles back catalogue.

So it seemed unlikely that offering The Beatles remasters for a quarter per track was just straight-up piracy; surely, MRT had some argument that what it was doing was legal.

And it does. EMI, which controls The Beatles CD offerings, filed a federal lawsuit on November 3 and MRT responded yesterday. All documents became available last night, and they show the recording industry trying to figure out just what could possibly be going on here.

In fact, that's exactly what RIAA general counsel Steven Marks (last seen in these pages authoring an op-ed in favor of the industry's prosecution of Joel Tenenbaum) asked in an e-mail to MRT boss Hank Risan: "What's going on?"

Steven Marks

Risan's brief reply explained everything (*cough*). MRT was not violating any copyrights, because it actually controlled the copyrights for the music it sells. But how could MRT control the copyright to a song like "Maxwell's Silver Hammer"?

"I authored the sound recordings that are being used by psycho-acoustic simulation," Risan replied, then concluded, "I hope this satisfies your concerns."

Marks shot back a reply from his iPhone. "Thanks, Hank. What is psycho-acoustic simulation?"

Risan adopted a dismissive tone, saying that he had explained it to the RIAA back in 2001 when he was at their DC headquarters showing off MRT's streamripping protection tech. "Psychoacoustic simulations are my synthetic creation of that series of sounds which best expresses the way I believe a particular melody should be heard as a live performance."

This certainly didn't satisfy Marks; a federal copyright lawsuit was filed in California immediately, accusing MRT of piracy "of the most blatant and harmful kind" and blasting the "willful and overtly defiant manner in which they are acting."

So defiant, in fact, that MRT had actually registered for copyright protection on the songs it was selling. "To make matters worse," says EMI's complaint, "Defendants recently sought to register their infringing sound recordings with the Copyright Office, apparently claiming that because they copied the sound recordings using their own computer system, they now own these digital copies and have the right to distribute them to the public."

EMI asked for an immediate restraining order against BlueBeat.

You wanted novel legal theories? You got 'em!

Here's what's happening. Risan is making the claim that he has created a new "audio-visual work" from the original sound recordings by running them through some sort of "psycho-acoustical" model and adding some artist pictures into the MP3 file.

MRT's response to the lawsuit has so far been cursory, but it does assert that "Plaintiffs are not likely to succeed on the merits because Defendants' website markets and sells an entirely different sound recording than that copyrighted by Plaintiffs. Section 114(b) of the Copyright Act explicitly states that the fixation of other sounds than those in a copyrighted sound recording does not constitute a copyright violation."

Section 114(b) is designed, as the RIAA points out, to make clear that recording a new version of a song (live versions, cover versions, even new studio versions by the same artist, which is why you sometimes see famous artists re-recording their own material late in their careers) creates a new work.

Section 114 of the Copyright Act makes clear that rightsholders have the exclusive right to "duplicate the sound recording in the form of phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording." They also have the right to create "a derivative work in which the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality." MRT relies on another part of the section that talks about "an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording." MRT appears to be saying that its own recording off The Beatles CDs is somehow a new recording with "other sounds." EMI is having none of it.

Calling the whole idea "nonsensical," EMI retorts, "Defendants’ 'psycho-acoustic simulation' argument is the equivalent of claiming that the sound recordings Defendants are selling were 'independently fixed' and noninfringing because they were created using music recorded or captured from the radio. Such a theory would, of course, completely eviscerate the rights of sound recording owners, and it thus has been firmly and consistently rejected."

The MP3 format uses psycho-acoustic models to do its compression in such a way that it doesn't throw out the bits that are most important to the human ear. MRT may simply be claiming that the act of ripping and compressing a song—perhaps using a tweaked psycho-acoustic model—creates a new sound recording in which it owns the copyright. If true, then copyright in sound recordings is meaningless—and I may set up an online shop to start selling all those recordings "I made" by ripping my Wilco CDs.

MRT then adds a bit of multimedia content to the files, viewable through its proprietary player, and registers them as new "audio-visual works." Copyright attorney Ben Sheffner, who provided our on-the-ground reporting from the Tenenbaum trial, dryly notes on his blog that "this is absurd. One cannot copy a sound recording and then avoid an infringement claim by adding pictures."

Using novel legal theories to pressure companies like Microsoft and Apple is one thing; if you don't succeed, no worries. But selling The Beatles catalogue online—and being first to do so—is a very different game, and the labels won't be inclined to laugh this one off.

At least now we know why BlueBeat carries this odd notice at the bottom of its pages: "All audio-visual works copyright � 2009 (reg. # PAu 3-407-524) BlueBeat, Inc, a subsidiary of MRT. BlueBeat transmits simulated live musical performances for free at 160 and 320 kb/s."